Mortgage Applications Just Hit a 20-Month Low. Should You Buy or Wait in Greater Sacramento?

By Scott Ostrode, Team Ostrode Properties, Keller Williams · Updated October 9, 2026

Short answer: Fewer mortgage applications means less competition, and that’s good news for prepared buyers. If you’re a qualified buyer in Sacramento, Folsom or El Dorado Hills with stable income and a 5-to-7-year horizon, this fall offers something spring didn’t: room to negotiate on price, credits and repairs. And if today’s payment at 7.5% feels like a stretch, that’s okay too. Using this time to get fully prepared puts you in a strong position for when the numbers line up.

A few situations can shift the picture: if rates fall quickly and buyers rush back, if your loan goes past the $832,750 conforming limit, or if you need to sell first. I’ll walk through each below.

What the new mortgage application numbers actually say

The Mortgage Bankers Association’s weekly survey, released October 7, 2026, showed applications fell 4.2% in the week ending October 2. That was the fifth straight weekly drop and the lowest total since January 2025.

The driver is rates. The average 30-year fixed conforming rate rose to 7.49%, the highest in almost three years, according to MBA. A year ago the same survey showed 6.42%.

Two details matter more than the headline:

• Purchase applications were 15% below the same week last year. Fewer buyers are competing for homes.
• Refinance applications were 56% below last year. With refinance activity quiet, lenders are eager for purchase business, which can work in your favor when you shop for a loan.

Why a slowdown in applications can help a prepared buyer

Applications are an early signal. They show up weeks before changes appear in closed sales. When they dip, sellers see fewer showings and fewer competing offers, and active buyers gain negotiating power.

What 7.49% means for your monthly payment

Seeing the actual payment makes it easier to plan. Here is principal and interest on a home near El Dorado Hills’ typical value of about $920,000 (Zillow Home Value Index, June 2026), with 20% down.

That’s about $528 a month more than a year ago, before taxes and insurance. The good news: tools like seller-paid buydowns and ARMs can close much of that gap. Your rate depends on credit, points and lender; these are national averages, not quotes.

The ARM option

More buyers are choosing adjustable-rate loans to lower their starting payment. MBA reports ARMs were 10.3% of applications. In this example, an ARM brings the payment back to about where a fixed loan was a year ago, saving roughly $500 a month at the start.

It’s worth knowing the details: the ARM average carried 1.69 points versus 0.84 on the fixed loan, so part of the lower rate is paid upfront, and the rate can adjust after year five. An ARM is a smart fit if you expect to sell or refinance within the fixed period and could handle a higher payment later if needed.

Use the $832,750 line to your advantage

In 2026, the conforming loan limit for a single-family home is $832,750 in both Sacramento County and El Dorado County. Loans above that are jumbo loans, with different down payment and reserve requirements.

Many El Dorado Hills and Folsom homes land right near that line, which creates an opportunity. A slightly larger down payment, or a seller credit used to buy down the rate, can often keep you in conforming financing. Ask your lender to run both versions.

What this means if you’re buying

Less competition shows up first in terms, then in price. Here’s what buyers can ask for right now:

• Seller credits for a rate buydown. A credit toward a 2-1 or permanent buydown often saves more per month than the same dollars off the price.
• Repairs and full inspection contingencies. Sellers are more open to a complete inspection period than they were in spring.
• Time. Longer escrows or a rent-back are on the table when you’re not up against three other offers.

When it makes sense to prepare now and buy later

Taking a little more time can be the smartest move if:

• The payment at today’s rate would be more than you’re comfortable with for the next two years, even if rates never drop.
• Your down payment would leave you with less than a few months of reserves.
• You expect to move again within three years, since closing costs would eat most of the benefit.

You’ve probably heard “marry the house, date the rate.” It works best when you’re comfortable with the marriage on its own. A future refinance is a bonus, not the plan, since it costs money and requires qualifying again. The good news is that preparation time is never wasted: getting pre-approved, building reserves and tracking homes now means you’ll be ready to move quickly when the timing is right.

What this means if you’re selling

Today’s buyers are serious and motivated. Homes that are priced right and show well from day one are still attracting strong offers.

• Price to the current market. Buyers are comparing your home to the payment they can carry at 7.5%, and a well-priced listing stands out.
• Consider a rate buydown instead of a price cut. It speaks directly to what buyers care about most: the monthly payment.
• If you’re buying and selling locally, a balanced market works in your favor. You may give a little on your sale and gain it back on your purchase.

After pricing a recent Roseville listing in line with the market, we received a full-price offer in under two weeks. That’s well ahead of the greater Sacramento area, where the typical home takes about 33 days to go under contract and only about one in three sells within two weeks (Redfin, 2026).

How Sacramento, Folsom and El Dorado Hills differ right now

The national numbers don’t tell the whole story. Each of our local markets is responding to rates in its own way.

Sacramento
Across the greater Sacramento area, homes priced at or below the regional median of roughly $585,000 continue to see the strongest buyer activity. Sellers at every price point who price right from day one are seeing the best results.

Folsom
In Folsom, resale homes are competing head-to-head with new construction offering rate buydowns and closing credits. Resale sellers who price realistically and present their home well are winning buyers over, and buyers have more great options to choose from than they’ve had in years.

El Dorado Hills, Rescue and Placerville
El Dorado Hills’ typical home value was about $921,600 as of June 2026, holding steady over the past year (Zillow). Stable values are a sign of a healthy market. With the payment, not the price, being buyers’ main consideration, creative financing like seller-paid buydowns is helping deals come together.

A simple way to decide: buy now or prepare

Answer these four questions:

1. Can I comfortably carry the payment at today’s rate for at least two years?
2. Will I likely stay five years or more?
3. Will I have three to six months of payments in reserves after closing?
4. Is there a home that fits my life, not just my budget?

Four yeses: This is your moment. Shop now and negotiate with confidence.
Any no: Get pre-approved, set up price alerts, and you’ll be ready to act the moment the numbers work.

Your next step: Ask a lender for a side-by-side of fixed, ARM and buydown options at your price point. Then call us for a list of homes where sellers are already offering credits.

Frequently asked questions

Why are mortgage applications so low right now?
Rates rose in September and early October 2026, with MBA’s 30-year fixed average reaching 7.49%, the highest in almost three years. Many buyers and refinancers are pausing, which means less competition for those who are ready.

Are home prices going to drop in El Dorado Hills or Folsom?
No one can predict that with certainty. El Dorado Hills values held roughly steady year over year as of mid-2026. When demand softens, it typically shows up first as longer days on market and more seller credits, both of which benefit buyers, rather than sharp price drops.

Is it smart to buy now and refinance later?
It’s a great strategy when you can comfortably afford today’s payment on its own. If rates fall, a refinance is a welcome bonus, but it costs money, requires qualifying again, and isn’t guaranteed.

What is the conforming loan limit in Sacramento and El Dorado counties for 2026?
$832,750 for a single-family home in both counties. Loans above that are jumbo loans. The 2026 FHA limit is $764,750 in both counties.

Should I choose an adjustable-rate mortgage?
An ARM can meaningfully lower your starting payment. It’s a strong fit for buyers who expect to move or refinance within the fixed period and could handle a higher payment if needed.

Is this a good time to sell my home?
Yes, for sellers who price for today’s buyer and are open to credits. Serious buyers are still out there and ready to act. If you don’t need to move, spring is another good option. We’re happy to walk you through both scenarios.

About the author

Scott Ostrode has been a licensed California REALTOR® since 1998 and leads Team Ostrode Properties with Keller Williams in El Dorado Hills. For more than 25 years he has helped buyers and sellers across El Dorado Hills, Folsom, Rescue, Placerville and Greater Sacramento through every kind of rate cycle, from the early 2000s to today. DRE #01241383

Questions about your own numbers? Call or text Scott Ostrode at 916-900-1880 email Scott@TeamOstrode.com, or visit www.teamostrode.com

Data as of October 9, 2026. Rates are national averages from the Mortgage Bankers Association and are not loan offers. Talk with a licensed mortgage professional about your situation.